Community Hospital is a nonprofit, generalacute-care hospital located in a wealthy suburb of City. Last year,it reported revenues of $100 million, and a “profit” (net revenuesin excess of expenses) of $12 million. During the course of theyear, it provided free emergency-room care to 300 uninsured poorpatients out of a total of almost 50,000 patients served during theyear.
The cost to the hospital of this care (calculated using anaverage-cost methodology, including administrative overhead) was$800,000. Community Hospital also runs an ambulance service for itscommunity; the expenses for that service are $2 million per year,but the hospital received approximately $1.8 million in insurancereimbursements for ambulance services. It also reported servingsome 1500 Medicaid patients.
According to the hospital’s accountingdepartment, the reimbursements the hospital received for Medicaidservices failed to cover the average costs of those services by $3million. During the year, the hospital sponsored several communityhealth education “fairs” at which hospital nurses tookblood-pressure readings, tested for diabetes, and so forth. These“fairs” were well-attended, serving about 5000 people total. Thehospital also runs several pre-natal care seminars each year thatenroll about 2000 women from the community, most of whom delivertheir babies at Community Hospital. The cost (essentially thepro-rated portion of nurses’ time devoted to these activities) forthe year for these health fairs and pre-natal programs was $1million. "Should Community Hospital be tax-exempt? "
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